The topic is there's a limit to how many annuities you can buy. There's a limit to annuity purchases. You may say, "Wait a minute. You're saying that if I wanted to put everything I had in annuities you wouldn't make the transaction? You wouldn't sell it to me? Even though you're on commission and all commissions are built into the annuity product and it's a net transaction to you?" The answer is, I would not. I would not sell it to you.
I know what you're saying. You're going, "Wait a minute. We live in America. America, the beautiful, land of the free, home of the brave. A place where we can eat as much as we want. We can talk as much as we want. We can yell as much as we want. We can drive as much as we want. We can do anything we want, and we can do it without moderation. Right, Stan?" Right! "And that goes with financial products. I can buy as many stocks as I want. I can buy as much Bitcoin or mutual funds or any of that that I want. Right?" Yeah. You can go crazy. You can buy as much, and no one's ever going to say to you, "Don't buy that." There's no limit. But there is a limit on what you can buy with annuities.
Again, I know what you're saying, "That can't be. Because, I went to the bad chicken dinner seminar, and they said that I could take everything I had and put it into an annuity." First of all, they're wrong. Now, I'm going to give them the benefit of the doubt that they don't know the rules. But you can't do that. Let me give you a great story. We had a situation recently where a person wanted to buy a specific type of annuity. We went through the suitability, and we said, "Okay, I think this makes sense." It was an income product, but they already had a lot of income products. It went to the carrier, and the carrier said, "Based upon what this person owns, we really don't think that they need more income." And they denied the application and the checks that were coming in. We went, "Okay, that's fine."
We like that in the annuity industry, there's a governor, there's a limitation in place. You can't come to me and say, "Hey, Stan, I have $7 million or $700,000 or $70,000 total, and I want to put it all into an annuity of a MYGA or SPIA, or whatever.” It will not go through. You’re saying, "You've got to be kidding me. You mean that the annuity companies will not accept that?" Yes, that's what I'm telling you. The only way that that can get through is if the agent fills out the application incorrectly or falsely.
Now, when I always talk about the annuity industry prefer 50% of your investible assets being the maximum amount you can put in annuities total of any type... And we've seen it be pushed to 60% if we can go to bat for you for a specific reason. But no more than that. So there's a lot of you out there that are probably watching this go, "Wait a minute. This person sold me, and I have 80% of my investible assets in annuities." Well, then I would probably go back and look at the application. Because when you fill out the application, it's the investible net worth is what the annuity companies are looking at. They're not looking at your home and they're not looking at your guitars or your jewelry, or that '55 Corvette you have. No, that's not what they're looking at. They're looking at investible assets, IRA, non-IRA, Roth IRA, your checking account, your savings account, liquid assets, and investible-type assets. That's what they're looking at. And they're saying, "As an industry, we really frown upon anything north of 50% in annuities." Again, once I said, we can go to bat for you if there's a specific situation. But we're not going to go to bat for the whole shooting match.
So, annuities are the only financial product on the planet, in my opinion, that you can't pull all your money in. You can't go all in. And by the way, that's a good thing. Now, the annuity industry gets a bad rap on how things are sold. And "I hate all annuities." Those guys. Or "All annuities are expensive." That's stupid. Or "Don't put annuities on an IRA." These are just idiots. Think about it, okay? They don't know what they're talking about. But with annuities, you can't go all in. And I like that. And if someone is recommending you, if your brother-in-law or your frat brother is pitching you something, they're trying to put all your money in or a big portion of that money, then they either don't know the rule or they're filling out the application wrong for it to go in.
The vast majority... I never say all, because "all" is a big word. But the vast majority of carriers will not accept the annuity if it's not suitable. In other words, it doesn't solve a specific goal. And if it's too much of your overall investible assets, they will literally decline the application and they will not accept the money. I know that's hard to believe.
See, I think the annuity industry has some great things in place as an industry. The first one I love is the free-look policy. This means you can get your money back after the policy has been issued, and you don't have to give a reason. You just get your money back. It's called the free-look policy for a reason. And every state has a specific number of days, that you can look at the policy. The other thing is what I'm talking about now. They will not allow you to put too much money in annuities. And what do I always say? You ask two questions and you answer two questions. What do you want the money to contractually do? And when do you want those contractual guarantees to start? Those are the two questions that determine, with us, if you even need an annuity. And if so, what type will give you the highest contractual guarantee and solve the goal.
The other thing I come up with is PILL, Principal Protection, Income for Life, Legacy, and Long Term care, P-I-L-L. If you don't need to solve contractually for one of those four items in the PILL, then you do not need an annuity. Never ever buy an annuity for growth, in my opinion, you can do better with non-annuity products for growth. You just can't buy annuities if you want them. You just can't pick up the phone and buy it. Now, will some agents try to sell it to you? Maybe. Will some agents not fill out the application properly? Maybe. But the annuity companies are trying to catch that. They're trying to make sure that you're not going to overfund the annuity. And that's a good thing. We're always going to reel you in.
I was just on a phone call before this taping with a gentleman and he goes, "Well, we can solve a lot of it with Multi-Year Guaranteed Annuities, but what do I do with the rest, Stan The Annuity Man, America's Annuity Agent?" My comment was, "I guess you're going to have to buy CDs, but I don't sell CDs. So go to bankrate.com and find the best CD rates." He's blown away. "You mean you're not going to sell me the rest? And I want to buy the rest with MYGAs?" I'm like, "Yeah, because we're at that 50% threshold, and it doesn't make sense for you. Go buy CDs. Go buy treasuries. Go buy iBonds. Go buy something, but it can't be annuities because we're not going to cross that threshold." We're not going to cross that line. I'm hoping these videos will help the industry and the agents and advisors who don't know that this is a rule and don't follow this 50% rule, to start implementing that. Because it's for the good of the consumer. And if it's for the good of the consumer, then that's great.
Annuities are the only product on the planet that can provide a lifetime income stream as long as you're breathing. But that's not the only way that you use annuities. People always say, "Well, I don't need lifetime incomes. I don't need an annuity." Well, there are annuities for principal protection. Those are called Multi-Year Guaranteed Annuities. There's a myriad of annuities out there. But what I would tell you is always own them for what they will do, not what they might do. And always have them in proportion.
Let me leave you with this. And this is a typical story that comes to me. And when you schedule a call, go to theannuityman.com. You can run quotes and use our proprietary calculators. And on our proprietary calculators, you can use what's called a reverse engineering quote. A call I typically get is, "I need more income." My question is, "Well, how much do you need?" And they'll say, "Well, $2,500 a month." "Okay, great. Let's use as little amount of money as possible to solve for that contractual goal." You can run those quotes on my site, solving for the contractual goal. How much money is it going to take contractually to solve or work? $1,500, $2,500, $3,000 a month, whatever it is. But the bottom line is, my job and my team's job here at Stan The Annuity Man, The Annuity Man, LLC, is to use as little amount of money as humanly possible to solve the specific goal that you have.
So, annuities, if you didn't know this already, you do now. I think it is the only financial product that you can't go all in with. I really believe you could buy all the futures you wanted or all the options you wanted. Maybe I'm wrong about that. But I think you can. I know you can go and buy all the stocks, bonds, BTS, and mutual funds you can. But the annuity industry will not allow you to do that. And that's a good thing.
Never forget to live in reality, not the dream, with annuities and contractual guarantees! You can use our calculators, get all six of my books for free, and most importantly book a call with me so we can discuss what works best for your specific situation.